AIG Considers Joining Greenberg's Bailout Lawsuit
Insurance company AIG holds a board meeting Wednesday to consider joining former CEO Maurice "Hank" Greenberg's lawsuit against the government over its handling of the AIG bailout in 2008. For more on the suit, Steve Inskeep talks to business reporter Michael de la Merced of The New York Times.
STEVE INSKEEP, HOST:
The insurance company AIG is holding a board meeting today to decide whether to sue the United States government. You may recall AIG received a $182 billion bailout from Washington during the financial crisis in 2008. So turning around and suing the government might seem a little gauche. What AIG's board will actually decide here is whether to join an existing lawsuit, a multibillion-dollar lawsuit which was brought by the former AIG chief, Maurice "Hank" Greenberg. He was a major shareholder before the bailout. He remains an investor, and he is very unhappy with the terms of the bailout.
Here's New York Times reporter Michael de la Merced.
MICHAEL DE LA MERCED: He says that as a shareholder he lost out and he's arguing that other shareholders have lost out as well, and that AIG has an obligation to them and not to taxpayers to try to get some of that money back. And so AIG now has the opportunity to come in and say whether it wants to join in the lawsuit, which is all leading up to the meeting when Mr. Greenberg and his lawyers, as well as representatives of the Treasury Department and the New York Federal Reserve, will come to AIG's board room and make presentations to the board and argue their case.
INSKEEP: I wonder if part of this - and I don't mean to question Mr. Greenberg's motives - but, you know, you're the head of a giant company, you get the company taken out from under you, it's a national humiliation, you know, wounded pride has to factor in here somewhere, doesn't it?
MERCED: It's probably safe to say. He was forced to resign from the company in 2005 after an investigation by Eliot Spitzer prompted the board to basically say Hank, you've got to go. And he's sort of nursed this grudge for a while, and so he's gone after various government agencies. And he's actually had squabbles with the company as well, and it wasn't until 2009 that he finally settled with the company over his ouster.
INSKEEP: What is Greenberg say the U.S. government should have done differently?
MERCED: What he's sort of saying now is that AIG did need some help, but not in terms of the government taking an 80 percent stake, not in terms of this really high, what he calls a punitive interest rate on the loan that had extended AIG. He thinks the government should have just provided AIG with a credit line that would've helped it weather the storm.
But what the government has consistently argued is, well, that wasn't really the choice. The choice here was either the board could have not taken our money and the company could have expired, it could have died. And the government has said that it's not really much of a choice because we were talking about saving this company and stabilizing the global financial system.
INSKEEP: So, based on your reporting, is the board seriously considering joining this lawsuit - the board of AIG?
MERCED: What they've tried to signal is that they want to take this whole idea of fulfilling its duty to shareholders very seriously. But I think reading through the tea leaves, the board would be really hard-pressed to go ahead and join this lawsuit. And as one professor we spoke to basically says, slap taxpayers in the face. AIG, its board and its CEO, Bob Benmosche, have definitely had a keen eye on the politics and the public reaction and that's why they've taken a lot of steps to thank taxpayers, say that we're going to repay taxpayers. And you'd have to assume they are very cognizant of what might happen if they decide to go ahead and join Mr. Greenberg in his lawsuit. But they want to at least show that they are very conscious of their duty to shareholders, even if they may ultimately decide not to join the lawsuit.
INSKEEP: Michael de la Merced of "The New York Times." Thanks very much.
MERCED: Thank you. Transcript provided by NPR, Copyright NPR.